Category Archives for "UK property investment"

Creative marketing strategies to boost off-plan property sales

7 Creative marketing strategies to boost off-plan property sales

How we ensure we reach out to the optimum target market

When you want to boost your off-plan property sales to property investors, it’s important to know how those property investors think. Our reach and communication strategy gets our property consultants into the hearts and minds of investors, whether from the UK or overseas.

We understand that off-plan property is not sold purely on the numbers. Investors today are more likely to put themselves in the shoes of their target market – people who want to rent or own a home where you are selling your off-plan property. We create narratives that sell lifestyle potential hand in hand with investment potential. Then we develop strategies to maximise the marketing message and reach as many potential investors as possible.

Here are seven key marketing strategies we employ to boost your off-plan property sales:

1.    We create strong lifestyle and investment descriptions

We work hard to write copy that highlights the best features of location and property. Those first few words are crucial, so we use power words that pack a punch. We’ll include property images and location photos as necessary to increase sensory impact.

2.    We optimise for online searches

If we’re selling off-market, we understand the need to market subtly. We write copy that educates and informs investors, leaving them with a desire to discover more. Contents are optimised so that those most interested in the opportunity can easily find it online. We include keywords and key phrases in our marketing copy and on our landing pages.

It encourages investors to not only discover and read about why they should invest in a specific location but also why the type of property you are building is best for investment. This method leads them through the sales funnel and enables us to capture their email details – from when we can personalise our marketing effort to the individual investor.

3.    We use email extensively

Having collected the email details of interested investors, we will begin our email marketing campaign. New leads are added to existing, and segmented for most effective penetration. We use email titles that create urgency to open and read. We include details about the investment opportunity, and a call-to-action as the next step. Often this is a link to a specially designed landing page.

We utilise autoresponder software to provide a seamless marketing experience, dependent upon investor actions.

4.    We create landing pages as two-way streets of information

We discover more information about prospective investors through landing pages. These pages are designed to capture investor info while giving away something for free. Perhaps a free-to-download investment guide. These help to increase our knowledge of what each investor registered with us wants. It also gives us the opportunity to take our marketing to the next level – personal contact.

5.    We use blog posts as marketing tools

Our writers are tasked to create blog posts that help the marketing process. These may be general or specific educational posts. These do several jobs for us. For example, they:

  • Focus on identified keywords, which are used throughout the post to increase ranking
  • Include contact details and a clickable contact route
  • Include general and in-depth information to cement investment potential of the area or property type
  • Always include a call-to-action, which prompts the reader to take the next step along the marketing funnel

6.    We leverage social media

We have extensive reach via social media and use Facebook, LinkedIn, Pinterest and Twitter to promote our content and investment education.

Our Facebook business page aimed specifically at investors and showcase our track record. We’ll add Facebook posts to promote associated blog content. We use videos and photos and other imagery to encourage views and shares.

We schedule tweets on Twitter to keep interest flowing and augment tweets with images and links back to content and landing pages. Hashtags are used to help people find our tweets, and we ensure they are retweeted.

LinkedIn is a powerful tool to make connections with investors. We publish content that showcases our capability and connections with developers, and we work hard on expanding our connections in target markets.

7.    We are consistent throughout

Whichever channel we use to market the off-plan property, we ensure consistency of brand and message. We identify the target investor and use the most appropriate marketing strategies for them. When our target audience sees our marketing and other content in different locations they don’t become confused with different messages.

Throughout our content, marketing, and personal contact, we ensure that we highlight the investment potential of the off-plan property. We market to the investment needs of the investor, and the lifestyle needs of their tenant – combined, it’s a powerful message which ensures success.

Contact us today on + 44 207 923 5680, and we’ll start developing our segmented investor client lists specifically for marketing your off-plan property sales and design a soft marketing plan to produce outstanding results.

Live with passion,

Brett Alegre-Wood

Be bold, be informed, be rewarded in Property Investment

Be bold, be informed, be rewarded

There is no such thing as a catch-all “how to” guide to property investment. Every company, developer, agent, brokerage, mortgage adviser and financial advisor has a different take on how to make money in property.

There are, for me, two ways that an investor can grow a lucrative portfolio of properties – the management of this will be different for all people, as will be the structure. Capital growth or yield, retirement planning or school fees… who knows? It doesn’t matter, that is a personal choice. What does matter is the approach you take to property investing.

Be bold…

There will ALWAYS be uncertainty in the market. There will ALWAYS be a reason or excuse not to invest in property or at all: referendums, elections, commodity prices, geopolitics because your hairdresser told you not to! Whatever the excuse, you can sell it to yourself if you are looking to talk yourself out of it. This doesn’t mean that you shouldn’t take these major factors into account but do so with care and don’t let it scare you off. Bricks and mortar go up in value, they aren’t making any more land (in this country) and the population is growing. It doesn’t take a genius to do the maths on that. When should you get involved? As soon as you can, buy a place for yourself, but if you can’t afford something big enough for your family, buy something to rent out and still get yourself in the game. Make sure you leverage sensibly to maximise your returns and if you can have someone else paying off your mortgage then even better. Never, ever over extend yourself no matter how tempting something sounds. If you can’t afford it, don’t do it. If you can, jump in!

Be informed…

I am NOT saying just jump in with both feet and not think about it. How to invest in property sensibly is not knowledge we are born with, even for those with innate good sense it is something you must make a point to learn. How do you learn? Read everything relevant you can get your hands on, read varying opinions and different arguments, listen to experts and listen to your friends who own property. Essentially become an expert in your own right, here’s the tricky part… don’t become arrogant and think you know it all. I have been in the property for 15 years and I still know I can gain from asking, questioning and debating with everyone in the market so I can keep on learning. There are companies and managers who can help you and guide you. Taking advice from someone who knows more about this than you will stand you in good stead. At the end of the day the decision to invest is always yours, but the more informed the decision, the better the dividend it will pay.

Be rewarded…

In whatever way your portfolio is managed, for whatever reason, you are building a portfolio, by being both bold and well informed you will be rewarded.

I won’t tell you who to invest with or how to invest, it’s not my place to. I work for Castlereach within a group of companies headed up by Brett Alegre Wood and the guys and girls here are tremendous, I respect them all and I trust them with my own portfolio and thereby the success of my future.

Check them out here www.gladfish.com and see if you like the sound of our formula for reward.

Firecracker features that propel off-plan property sales

Firecracker features that propel off-plan property sales

How a developer can sell when others around them fail

Off-plan property sales can be tough, especially when the market is slowing down, as it appears to be at present.

The hung parliament that resulted from general election 2017 was another blow. It has done nothing to instil confidence in a market still reeling from the UK electorate’s decision to leave the EU. This on its own, though, shouldn’t deter investors in regional off-plan property. But there are also other factors in play. Economic numbers have been mixed around the world. The recent Grenfell Tower tragedy is likely to deter homebuyers from considering a purchase in any tower block.

There will be developers who can still sell significant numbers of properties off-plan, despite a slowdown in a market that appears temporarily saturated. What is it they do that creates such success in their off-plan property sales? How do they achieve enough sales to pay for the development before it is completed? Where and how do Castlereach help developers hit their targets?

Here are three firecracker features of the most successful developers selling properties off plan.

A successful track record

When you have targets for your off-plan property sales, property investors want to know that their investment objectives will be met. They will have their property investment strategy designed to achieve this. They want to know that the developer they are buying from has a record of delivering developments to the quality anticipated and within the quoted timeframe.

Developers that have delivered multiple and similar projects in the past will have the experience needed to know how long a project will take to reach completion. Our investor clients want to know that a property they agree to buy – perhaps before ground has even been broken – is going to be delivered on time. They can then develop their investment strategy in line with this. It gives them a definitive completion date to aim for and allows them to arrange any required financing.

When we work with investors and offer them property investment opportunities, the investors know that we have already done due diligence investigations on the developer. We’ve assessed the viability of the development from its location investment potential, and from the ability of the developer to deliver on their promises.

The investor buys the property off plan and benefits from the potential of an increased value at the time of completion. The developer meets its targets more easily, because of our reach to the UK and overseas investors and the reputation we have built up with them.

Anticipation of residential living needs

A second feature of the most successful developers is that they anticipate the future lifestyle needs of the people who will inhabit their properties. They create places in which people want to live near to transport and recreational amenities, and with ‘in-house’ amenities that sell.

Such amenities may include elements like pre-wired communication boxes, for instance. It removes the need for a resident to lay cables around their home to wire in their entertainment systems, computers, television, and so on. Systems which connect audio in all rooms and increase energy efficiency are going to be in demand. Intercom services, with a video link to front gates, allow residents to welcome guests and vet visitors more easily may become a standard in the future.

Gyms, open spaces, communal swimming pools and the like all add value in today’s market because tomorrow’s residents are likely to desire such lifestyle features. State-of-the-art security and safety features are likely to be more sought after, because of the recent tragic events in Kensington.

Developers that know what their customers want will win. And this brings me to the third feature of red hot off-plan property sales: knowing the customer.

The best off-plan property sales are made when you know the customer

Investors today are more sophisticated. They have wider and easier access to information. They understand who their target market will be – whether they wish to sell for capital gain or rent for long-term income, as most of our investor clients do.

Blanket marketing doesn’t work anymore. In fact, it can do more harm than good, especially during those early-stage, off-market sales efforts. The best strategy to maximising off-plan property sales is to know your customer. When you understand the investor, you need only to market under the radar to those investors who have expressed a desire to invest in the type of property, area, and a price point which is being offered. The success ratio rises because you are marketing to those who are most likely to buy.

It can take years for an initial meeting to evolve to a level of trust and confidence. It is usually reserved for the personal relationships. We communicate constantly with investors. And use social media and email, voice, and SMS communication strategies. We hold seminars and webinars, and our property consultants are proactive. They discuss investment strategy and the latest property investment opportunities with their clients. We then provide investment education and research to cement buying decisions. It’s unrealistic for a developer to put effort into locating potential investors. And spending the time and effort to develop hundreds of individual relationships.

When we work with a developer, we do so because we are confident that:

  • The location will provide investors with above-average returns through the long term
  • The developer will deliver to quality specifications and on time
  • We have the investor clients on board who are likely to be buyers

A deliberate strategy for off-plan property sales

Off-plan property sales don’t just happen. It’s a deliberate process, connecting the dots between plans and execution. Developers should evidence a track record of delivering a quality product on time. And homes that cater to people’s lifestyle needs. This helps to build trust with buyers. Those buyers must be targeted carefully and quietly. To do so, it’s imperative to know who they are and to have developed a meaningful investor relationship with them.

The developers who do these three things will find their developments sell out, while others remain unsold.

Contact us today on + 44 207 923 5680. Together we’ll work to achieve your sales targets, whatever the market condition.

Live with passion,

Brett Alegre-Wood

Leveraging investor reach to boost off-market property sales

Leveraging investor reach to boost off-market property sales

We started marketing your development years ago

Off-market property sales in the post-general election era look set to get tougher. The UK and overseas investors may become more hesitant to commit funds to a market that could be unsettled, despite Theresa May’s claims of forming a government to ensure stability. However, while many press headlines in the coming weeks are likely to send shivers through the hearts and minds of some investors, we’ve witnessed an early uptick in positive interest.

Why are our investor clients more positive than the press?

Our investors are savvy people. By the time they invest in off-plan property opportunities, they are highly educated about the UK property market. When others see nothing but dark clouds of pessimism, our client base focuses on the silver lining.

UK property fundamentals remain intact. There are excess demand and a backlog of unsatisfied demand that stretches back years. The economy may be shaken, but is unlikely to be stirred. The nature of the election result will not alter the massive governmental infrastructure spending already pencilled in for the next decade. In fact, it may serve to loosen the purse strings a little, with the potential for greater investment in public services.

We’ve worked hard over many years to educate investors from the UK and overseas about the attractiveness and long-term qualities of UK property investment. And how better to invest than in early-stage off-plan developments?

Our marketing of developments begins months or even years before a client invests. A long time before we have selected the area, outstanding location, and developer and development.

Off-market property sales made with educated confidence

We actively promote property investment education. Our educational resource may be the most extensive, focused solely on property. It is centred on the Gladfish Blog, which consistently ranks in the top 100 investment blogs and websites for investors worldwide. Also, we provide investment education material which includes blogs, articles, newsletters, videos, podcasts, webinars, books and research.

Our Gladfish property consultants help to keep investors grounded. Our market news and commentary removes the BS and sensationalism preferred by traditional media. We tell things like they are, ensuring that investors understand how to analyse news and ignore misplaced views. It helps investors take a long-term view.

Consequently, we find that our clients take advantage of sluggish property markets caused by short-term shocks. They understand that it is the underlying property market fundamentals that drive long-term returns. Also, as we provide free investment education and unbiased market commentary, we build long-term relationships with investors. These investors benefit from our approach to research.

Selecting and recommending the best places to invest in property UK

While we provide investors with the knowledge and tools that enable them to undertake their property research, we, of course, go above and beyond. We do the research for them.

We’ve developed a Ripple Effect Pentagon and unique Hotspots Algorithm, which pinpoint the top performing areas for investment. These tools and techniques are easy for investors to understand, and have proven to be remarkably accurate in their forecasting capability.

We analyse 108 data points across 324 UK areas and identify those areas in which the property fundamentals are strongest. We rank these areas, so our clients can see at a glance the best places to invest in the UK property market. Then we produce detailed investment guides that walk investors through the specifics and dynamics of each area. And we allow investors to download these for free.

Drilling down to specific location

With the best areas identified, we then drill down to pinpoint specific locations. It is where those property fundamentals come most strongly into play. Locations within walking distance of transport – or near shops, for example – rank high on the list of positive pointers for investment potential. With location identified, we then search for the final piece in the jigsaw.

Developer and development – sold!

Throughout our process of education, research, and location selection, our clients’ confidence increases. We ensure that we do things right, and throughout communicate the necessity to be cautious. For example:

  • Always undertake extensive research
  • Never invest without completing comprehensive due diligence
  • Invest with property fundamentals
  • Overestimate costs, and underestimate income

The penultimate step in our long-term marketing strategy to connect long-term investors with developers is to carry out due diligence on developers and individual developments. When we put that final piece of marketing in place – offering a specific development to a highly targeted slice of our investor client base – we do so in the knowledge that every piece of the off-plan investment opportunity stacks up.

Our investors are already three-quarters of the way to making a buying decision by the time we market an off-plan property to them. We’ve guided them by:

  • Educating, inspiring, and instilling confidence, no matter the market conditions.
  • Collecting client data, and learning their investment preferences and objectives.
  • Identifying area and location for investment.
  • Marketing the best developments from the best developers, in the best locations, to investors who are already warm to the idea of investing upon our recommendation.

We’ve sold over £750 million of property across the UK since 2004. We’ve helped more than 2,500 property investors achieve their goals. And we’re still building. Investors from abroad are making up an increasingly large proportion of our business ­– aided by our international reach (for example, in 2015, we conducted client meetings in 11 different countries across Asia, the Middle East, and here in Europe and the UK).

The marketing of your development has already started. In fact, it began when we first met our investor clients who will buy your development – and that was before your development even hit the drawing board.

Contact us today on + 44 207 923 5680, and we’ll start developing our segmented investor client lists specifically for marketing your new build development.

Live with passion,

Brett Alegre-Wood

A hung parliament shouldn’t deter investors in regional off-plan property-655890-edited

A hung parliament shouldn’t deter investors in regional off-plan property

What now for off-plan property sales in the UK?

So, general election fever is dead and buried. For now, anyway. But what impact is the hung parliament likely to have on off-plan property sales? We think the effect may be muted, especially in the regional cities where recent investment news has indicated resilience, stability and growth.

There will, of course, be warnings from property experts who predict the collapse of property values across the UK. Newspaper headlines will trumpet the demise of the buy-to-let investor. A period of political uncertainty as we dodge Brexit bullets, on top of UK property tax changes (which supposedly mean that “BTL is no longer profitable”) will prove the death knell for investment in the UK. At least, this is what the scaremongers would have everyone believe. Hasty developers may be tempted to pull their off-plan sales plans.

Swift action needed and taken

Perhaps we should learn from recent history. In 2010, the conundrum of the hung parliament was answered by the formation of a coalition government after several days of negotiations. Contrary to what people expected, the Conservative/Liberal coalition saw out its term. The government proved to be stable.

Mrs May has acted even more swiftly than David Cameron did in 2010. Within hours of everyone waking up to the news of a hung parliament, and wondering “what next?”, Mrs May announced she would seek a deal with the DUP, and put a new government in place.

In the aftermath of the vote, the pound fell by around 2% against the dollar and the euro and then stabilised. The stock market, which many expected to collapse, rose by a shade more than 1%.

The swiftness of Mrs May’s actions has gone some way to calm the markets. The need to keep the DUP on board might force the Brexit negotiation team to be less confrontational. The chances of a good deal for the UK may increase.

No bounce in property values, but an opportunity to take advantage of fundamentals

The post-election bounce in property values that many had predicted after a convincing Conservative victory may not happen just yet. However, if the negotiations begin well and the Con-DUP pact remains solid, there is no reason why UK property values should not perform similarly to the period between 2010 and 2015. The exception may be that this time around London gives up its star billing to the regional cities.

This election has not changed the startling shortage of new homes in the UK. In January 2017, the National Audit Office reported that there are more than 71,000 homeless households in England. A Parliamentary report confirmed estimates that demand for homes in England runs between 232,000 and 300,000 a year. The government’s target of 200,000 new homes built each year would fall some way short of the lowest estimates of demand, even if housebuilders had the capacity to pump up supply to target levels.

By the end of this parliament, investors from the UK and overseas who buy off-market and off-plan property in this market lull could be looking back and congratulating themselves for taking advantage of a politically prompted pause in the property market.

Investment attention turning away from London

London will continue to be a major centre for property investment, but the focus has shifted in recent months. Property in cities like Liverpool, Birmingham and Manchester are more affordable. Yields are higher. Significant spending on infrastructure and regeneration is ratcheting up inward investment.

Off-plan property is still in demand in these key regional locations. Supply has failed to keep pace with demand. Population growth, both at current levels and forecast, could widen this differential. Multi-billion pound projects, such as HS2 and HS3, offer significant potential for future growth. Travel times between major cities in the Midlands and the North and to London will be slashed.

We’ve seen increased interest from overseas investors in particular. The most recent fall in the pound is likely to prompt renewed search for value property investment opportunities.

Regional cities in early-stage recovery, says Hometrack

In late March, the Hometrack Index report concluded that England’s regional cities are in an early-stage recovery phase. It reported that:

  • Sales volumes in Liverpool and Manchester are up by more than 40% in three years.
  • Manchester’s price growth is leading all cities at 8.8% in the last year.
  • Prices in Birmingham, Leicester and Portsmouth increased by more than 7%.
  • Liverpool’s property price growth was not far behind, at 6.8%
  • However, London’s price growth has fallen to 5.6%.

Although the report predicted temporarily slower demand in the regional cities due to the impact of Brexit and economic uncertainty, its forecast continued upside in property prices and activity.

Liverpool – a buy-to-let paradise?

Recent news from Mistoria Estate Agents is evidence that Liverpool’s private rented sector is in the middle of a huge boom.  Demand for tenancies is up by almost 20% across the city. Property investors in this university city are seeing unprecedented demand from students, with almost seven tenants chasing every room in shared buy-to-let property. High-quality rental properties are also in high demand.

Here, rental yields are among the highest in the country, with average yields a third higher than the national average. Some property opportunities offer yields of 10% and more, with property highly affordable for investment.

Opportunities that our investors are seeking

High gross yield and high growth opportunities are exactly the types of investment our investor client base is searching for. These investors understand that UK property fundamentals remain strong, despite the recent political shambles. Pinpointing locations for profitable investment is what our investor clients expect of us. Working with developers providing the best quality off-plan property sales is how we achieve this.

Contact us today on + 44 (0)207 923 5680, and we’ll start developing our segmented investor client lists specifically for marketing your development in London and the regional cities.

Live with passion,

Brett Alegre-Wood

how can a developer maximise profits from a forward selling strategy

Off-Plan Property Sales – How property developers maximise profits

Fast and flexible Off-Plan property sales, well in advance

In my last off-plan property sales blog, I examined why whole of development off-plan property sales could be damaging to a property developer’s wealth. A more profitable option for many UK developers might be to use a more flexible sales strategy. When you work with us, you gain access to our diverse and geographically dispersed property investor database. These investors are actively looking for the best UK property investment opportunities. We do all the legwork for them, sourcing the best off-plan property from the best property developers.

Here, I’ll outline the benefits of working with Castlereach, and how doing so could help you smash your 2017 off-plan property sales targets.

Fast and Flexible, early off-plan property sales

When we work with an off-plan property developer, our full team swings into action. We’ll undertake the research that our investors in the UK and overseas require to make their buying decisions. We can commit to a deal within days. You’ll have the early stage commitment to off-plan property sales that gives confidence to your funders, and generates momentum behind your development and creates traction for your sales team (if you have one).

It also reduces the risk associated with your development. You’ll benefit from an effective amount of finance at a better margin.

Why chose individual off plan property investors

Selling to a single institutional investor can be a high-risk strategy. When you complete forward sales with Castlereach, you get the best of both worlds: a bulk sale with the advantage of committed individual investors. It reduces risk further, by removing the potential of losing the entire sale.

We also get to know our investor clients before recommending off-plan property investments to meet their goals. Our intimate understanding of their needs, objectives, and financial aims informs our confidence when selecting developments in which to invest. We know that they are long-term investors who will want to complete their purchases.

Benefit from an extended geographic reach

If there is one thing that Brexit taught property developers, it is that access to a global audience is imperative. We bring this to the table. No matter what the confidence levels among UK property investors, we’ve found that foreign investors have not lost faith in the UK property market. With the fall in the pound since the EU Referendum, it hasn’t surprised us that interest from foreign investors in UK property investment has increased so strongly.

Work with us and you’ll find that we have access to investors in the key overseas markets, and property consultants with the experience that makes a difference to all investment conversations. Our property investors are located across most of the world, including:

  • The UK
  • Singapore
  • Hong Kong
  • India
  • Malaysia
  • Abu Dhabi
  • Australia
  • Saudi Arabia
  • The EU

Exclusive offering to specific property investors

We simply don’t blanket market to our investors. We know the parameters that our investors want on an individual basis. We are aware of their requirements for yield, cost, returns, and location. Our marketing capabilities are second-to-none. We’ll take your off-plan property and float it without a splash during our off-market sales process. You get your development sold to long-term investors with minimum fuss, and no disruption to your sales strategy at later stages of the build process. In fact, we like it when property developers are selling at the same time as us. It helps you maximise both sales and profits.

With a high level of early stage sales, you’ll find that investors entering later will be more confident in their buying decisions. This will smooth your job of promoting to the UK market at subsequent stages of the build.

We keep things simple for property developers

We work with our property investors on a one-to-one basis and throughout the investment process. We’ll guide the investor with comprehensive research and a sales progression policy that is second-to-none. The investor benefits from a dedicated property consultant: a known and reliable single point of contact for all communication. This is vital, especially during long off-plan property sales processes which can take up to 18 months. We act as a single pivot point and liaison for every sale, ensuring the investors progress through to completion, removing a whole ream of tasks from your workload and doubt from your mind.

A strong track record backed by experience

Our team of property consultants benefit from more than 50 years of experience. You’ll find their passion and flare for property investment is infectious. These qualities have helped us build a track record that speaks for itself:

  • More than £800 million of property acquired
  • Over 3,800 units acquired
  • Value of individual properties acquired from £65,000 to more than £1 million
  • Worked with more than 100 property developers
  • More than 40 developments with 20+ units acquired

Working closely with property investors

We work closely with investors before, during and after your units are sold. We take on the role of personal property consultants, building trust and respect as we explore goals and ambitions together. We make it our job to understand each investor and provide the property knowledge and expertise to inform their investment decisions throughout the process of building a portfolio.

We also lead investment seminars around the world, with an educational focus and:

  • Presenting up-to-date research
  • Providing second-to-none local knowledge
  • Offering networking opportunities
  • Providing help in the investment process
  • Providing a gateway to the UK property investment

Contact us today on + 44 207 923 5680. Our property consultants will be pleased to discuss how the Castlereach advantage could benefit your early stage off-plan property sales. You’ll discover how other developers have used our experience and off-market strategic sales to help their promotional efforts, as those sales help to promote confidence of local investors and encourage increased funding possibilities.

 

Live with passion and fun,

Brett

conversation institutional investor does not want with a uk property developer

UK property developers can be terrified by Institutional investors

Whole development sales threaten net development profit for UK property developers

Private Rented Sector schemes are growing in their popularity as a sales strategy for UK property developers, especially in key central locations near to key transport links. It may be tempting for you to consider a forward purchase of your entire development. Your budget can be set, margins calculated, and profit fixed in advance. But working with a PRS scheme or single institutional investor also has a high degree of risk for UK property developers.

Here, I look at some of those risks – a conversation that institutional backers of PRS schemes will probably never have with UK property developers.

Property investors follow the money

The government backed PRS scheme has taken an incredibly long time to move out of neutral and into first gear. First announced in 2012, after two years no company had come forward to take up the governmental guarantee backing property investors. The problem was those guarantees didn’t cover the period of construction. Investors backing schemes were essentially left on the hook for any shortfalls or cost overruns.

On top of this obstacle, the recovery in the housing market turned the profit switch from renting to selling. In a rising market, it becomes easier to sell at premium prices. Profit margins increase. From a purely business point of view, building to sell makes more sense (especially in a country where home ownership is so embedded in culture).

PRS could limit the scope of investment

When UK property developers sell a development as a PRS scheme, the scope of potential investors reduces. You’re limiting your options to only the big institutional investors with an appetite for PRS. Limit demand and you limit competition. Limit competition and you limit your upside and price potential.

Remember, the institution needs to maintain its margins too. They’ll have their investors and backers to whom they must justify their investment on price and profit margin. In fact, you’re further away from the actual investor.

You’re cutting out the property investors who are buying for capital gain, you turn your back on smaller institutions who may want to invest but on a smaller scale, and you wave away smaller scale landlords who might not drive such a hard bargain on your selling price.

Property investment is a business, not a charity

PRS schemes are seen as ‘charitable’ by some landlords – in October 2014, Keith Exford, CEO of 60,000 home landlord Affinity Sutton told Inside Housing, “We remain unconvinced that [PRS] is a worthwhile activity for us. We don’t believe that private renting is a charitable activity. Therefore, it is a commercial one, and we don’t view the returns on PRS as sufficient. Why would we want to take the profit slowly? The only reason we want the profit is to build more affordable homes.”

Investing in a property for capital gain is a strategy that is used by property investors as their property portfolios grow. The money they make on sales is reinvested on rental properties. A lot of larger landlords and investors don’t want to be tied into a rent-only development, and so simply won’t consider a PRS scheme investment.

Developer margins get squeezed on PRS schemes

If big landlords don’t know how to make the numbers add up, there’s only one way they’re going to get a profitable deal – and that’s by squeezing the developer on price. Supermarkets love their ‘buy-one-get-one-free-deals’, but does the same sales strategy make sense for UK property developers?

Local authority partnerships are needed, but challenging

Developer landlords and specialist PRS companies find that PRS schemes can be difficult to justify. One such company, PlaceFirst, told Inside Housing that it sets its target at households earning £25,000. With the assumption that the family has around £480 to spend on rent, PlaceFirst’s requirement for a yield of 6% means that it only has about £75,000 to spend on building the home.

To make such development economically viable, partnerships with local authorities have to be created – and they can be notoriously difficult to cultivate, grow, and maintain (especially in the current uncertain political climate).

UK Property developers risk: The backer might pull out

PRS funds are a huge business, but they tend to be higher risk. The agreements and investment terms have to be negotiated, agreed, revised, and reviewed. The funds are backed by institutional money – which gives them their gravitas.

There is often a multi-level sigh-off process, moving through to board level. At each level of review, investment agreements can become increasingly complex and bogged down in a legal quagmire. It extends the length of time to get a development moving, negatively impacting UK property developers.

It’s not uncommon for such agreements to fall over at the last hurdle. If this happens, the whole process of finding a backer and getting sign-off has to restart.

An example of this risk is Kampus in Manchester. In 2014, Capital & Centric and Henry Boot Developments bought the Aytoun Street Campus site, near Piccadilly Station. UK fund manager, Lothbury Investment Management agreed to fund the scheme as a £200 million PRS. That deal began its due diligence process, and after nearly two years it fell through. The developer had to look for a new financial backer. American company Ares Management came to the rescue and signed the new agreement in February 2016. The Kampus development is now getting off the ground, though at what cost to the developer remains to be seen.

How can UK property developers still forward sell projects?

Here at Castlereach, we take a different approach. Our decision making is fast, flexible and focussed.

Our commitment to a deal can be made within days. By the time UK property developers have negotiated with a PRS fund, we could have completed. You’ll have the initial funding you need, without the expensive loss of time. Also, we don’t have to buy the whole development. Many of our investments are made on a forward purchase of 25% to 50% of a development. For UK property developers, this:

  • Creates rapid momentum for their development
  • Underpins the development, providing increased confidence in the scheme to the developer’s funder
  • Allows retention of a percentage of the scheme to sell later at a higher price

UK property developers with whom we’ve worked have found our approach works well for them, helping to increase profits and reduce funding costs. We work with huge and small UK property developers, all for very similar reasons.

By holding some property back from the early forward sale, you’ll benefit from selling nearer to completion. You’ll retain the benefit of capital uplift through the build cycle – helping UK property developers realise higher overall returns on the scheme than if you had forward sold the entire scheme too early.

Contact us today on + 44 207 923 5680, and we’ll be happy to discuss our forward buying process and how it could benefit your development.

Keep in touch,

Martin Sadler

how to smash your 2017 off-plan property targets

How to smash your 2017 off-plan property sales targets

Increase off plan property sales and value in a challenging market

With recent news confirming that new housing in the UK has topped 200,000 and planning permissions are running at 275,000 a year, next year could be a tough year for your off-plan property sales.

In London, the shenanigans surrounding Brexit continue to haunt the market. While the number of new builds appears to be curtailed in the capital, so too is the number of transactions. Taken in combination, these factors should help to keep prices from falling. Indeed, recent figures released by estate agent Haart shows that London property price growth has increased to 7.6% over the last year, while demand has fallen by more than a third.

Across the rest of the UK, a similar pattern is starting to emerge, though while demand has fallen slightly, the number of new build properties coming to the market is increasing.

The secret for property developers to increase off-plan sales is having a good, consistent sales strategy that adapts to make sure your new build properties stand out from the crowd. Having discussed a sales strategy to grow your off-plan sales in 2017 in my last article, in this article I want to look at how to make your off-plan and new build developments highly sellable – and then get them sold.

Highlight your unique selling point (USP)

One of the problems that today’s home buyers voice is that one development is very much like another: the same layout; the same property dimensions; the same fixtures, fittings and white goods. When faced with such a ‘non-choice’, the buyer usually goes with the best value option.

Your USP helps to command premium prices in the face of stiff competition. We’ll be able to highlight these to investors from the UK and overseas, providing evidence that supports the USP as an exceptional buy-to-let investment opportunity.

Distinct style and design features that make properties more sellable include:

  • Extra and innovative storage space, particularly in kitchens and bedrooms
  • Convenience items – think outside the box, and include things like bin shoots, remote control lighting and heating, etc.
  • Rooms that benefit from a lot of natural light
  • Open-plan living space
  • Green features

Add a touch of luxury

There are plenty of design and interior features that can be added to increase the ‘feel’ of a new build. People love luxury features – a “hero” component they can boast about.  A little touch of luxury sells to both home buyers and renters. Don’t underestimate the potential of luxury to turn on property investors who want to benefit from premium rental prices.

Common areas in apartment blocks: swimming pools, gyms, and rooftop gardens are all luxury features that help off-plan property sales. Within an apartment or house, consider a library or study, top-of-the-range appliances, smart heating and lighting, etc.

Consider price and design

It’s hard to sell an off-plan property as a bargain. It is, after all, effectively no more than a concept − a box of air that is captured in artist’s impression and a floor plan.

When we recommend off-plan properties to investors, we discuss the local area, its economy, and property fundamentals – shops, schools, transport links, major employers and major investment. We’ll also talk about the property itself.

A design including luxury features provides great talking and selling points, but as a developer, you should also pay attention to floor space layout – long halls reduce living space, while cleverly designed storage increases it. Available living space increases usable space and value which sells properties.

For off-plan properties, size matters

Some developers seek to maximise profits by maximising the number of units they build on a site. They’ll go for 50 one-bedroom apartments rather than 25 two-bedroom apartments. But consider this: those 50 one-bedroom departments need 50 kitchens, 50 bathrooms, and 50 sets of white goods. That’s a lot more expense in kitting out a block of one-bedroom apartments. And a lot more units to sell too.

Two-bedroom apartments garner more investor interest, too. They’re easier to find tenants for and command a higher rent.

When you’re planning a development, think about size long and hard – if you’re aiming at the student market, then one-bedroom places may be the way to go. But if you want to generate maximum interest from the UK and overseas investors, then size matters.

To park or not to park?

There’s a move towards zero parking spaces in London. Millennials are more likely to use public transport (especially with the Night Tube now providing 24-hour travel options and property investment opportunities for investors). Outside London, parking spaces are more important.

Consider target markets, location and local transport links, and then decide on whether to offer parking for all, a limited number of spaces, or none at all. The extra space freed to build extra apartments (or enhance the size and design of those planned) may pay dividends, but if it makes your off-plan properties harder to sell then it could be highly detrimental to sales (and profit).

Make your new build properties energy conscious

Traditionally, energy-conscious homes have been more attractive to home buyers than investors. We’re beginning to see this dynamic changing. As utility bills take up a larger slice of household expenses, renters are getting energy conscious. Energy-efficient homes sell more easily to tenants and command higher rental prices.

Do your research and provide it to investors

One of the things we do here at Castlereach is research property investment opportunities and relay that investment to investors. We make sure our investors know why your development is an ideal property investment opportunity and the property fundamentals that off-plan purchases will benefit from now and beyond completion.

The developer’s research will highlight why the apartments are in demand locally. Look at the local market, the demographics, the local employers and the population that make up the average homeowner or tenant. Investors want to buy off plan properties that benefit from natural demand, and not be blighted by being the wrong size in the wrong location.

UK off-plan property sales still attractive for investors

People in the UK may be reticent about buying homes at the moment (perhaps because of the economic uncertainty caused by Brexit), but property investors are increasing their activity. It is especially true of overseas investors. Recently, Skipton International announced an 80% increase in mortgage applications from British expats between August and November. That growth in interest mirrors our experience at Castlereach.

Overseas investors are benefitting from the slide in the pound. They haven’t been made nervous by the thought of the UK outside the EU. The demand for homes looks set to continue to outweigh the supply.

Find an edge to push your off-plan property sales through the roof

When looking for the edge that will help drive off-plan property sales, finding your USP and designing properties that appeal to buy-to-let investors will be a key theme in 2017. So, too, will your ability to attract investors from the UK and overseas.

While the fundamentals that make new build developments an attractive investment are the same for investors from the UK and overseas, how off-plan properties are marketed to different cultures requires individual approach and evolved strategies. That’s where our property consultants come into their own – we have huge reach within high net worth investment communities as well as the experience and strategy to sell your off-plan property, off market within agreed timescales.

Contact us today on + 44 207 923 5680, and we’ll be happy to discuss the help and expertise we can offer you as we link the best developers with active investors in the UK and overseas.

 

Live with passion and fun,

Brett

increase your off-plan property sales despite the luxury bubble bursting

Increase off-plan sales and take the luxury bubble bursting opportunity

Adaptable strategies to maximise new build sales

According to the Land Registry, the luxury end of the London property market has finally burst. Super prime sales have collapsed, but it’s not Brexit that’s to blame. With tens of millions in property developments designed for the high-end market remaining unsold, developers have to employ remodelling strategies to shift and sell their developments.

Here I’ll look at how the bottom has fallen out of London’s luxury property market, and what developers are doing to sell their developments. You’ll also discover how we work with developers to create strategies that sell.

Stamp duty stomps all over luxury development property sales

When the government increased stamp duty rates, it did so in the hope of reducing the number of additional properties bought. The idea – at least publicly – is that this will deter investors and leave more housing stock on the table for ‘genuine’ home buyers.

In the run-up to the introduction of the additional stamp duty land tax of 3%, buyers rushed through their purchases in March. Investors avoided the extra stamp duty, and the property market went through a month of incredibly high sales numbers. The extra demand helped to push property prices higher. Sales for two or three months suffered because purchases had been rushed through the market early. We also had Brexit in between.

A lot of market watchers blamed the fall in property investment transactions on Brexit, but with property market transactions now normalising again, it’s clear this wasn’t the case.

At the luxury end of the market, the so-called ‘super prime properties’ worth £10 million and more, sales have collapsed. In the three months to August 2015, there were 35 properties sold in the luxury bracket in London. This year sales have hit the rocks. Only five £10 million-plus properties sold in London in the comparable period. This lack of interest has also hit prices paid – an average of £16.3 million this year compared with £22 million last year.

The hardest hit in the luxury sector has been new builds – not a single one has sold.

Deflation of the bubble was inevitable

Prices of high-end luxury property in London have increased so far, so fast, that a correction was inevitable. Prices at the upper end of the market are always the first to be hit. With a review of non-dom inheritance tax on the cards, it’s unlikely that this end of the market will bounce anytime soon. Some analysts are predicting a multi-year lull in luxury home prices; and not only in London but across the UK.

Lower sales numbers at these higher prices might dismay the government (it will collect less stamp duty), but it could be devastating to developers who haven’t got a plan B. This is where revised off-plan property sales strategies come into play.

Deflating your luxury property could inflate your sales

We’ve found that the death of billionaire buyers is prompting developers to evolve their plans, and it’s working. As super prime sales have fallen, we’ve found that investment interest in smaller, more affordable properties has increased. It is especially the case from our foreign investor base, which has benefitted from the fall in the value of the pound. Off-plan property sales have suddenly become 20% better value. (Read more in our article “Foreign property investors demand new build property post-Brexit”.)

Developers are remodelling their projects to appeal to the lower end of the market, where investment is still strong. It means creating four or more apartments from one, with lower price points that appeal to a different investor profile. There are planning hurdles to overcome, but once these have been ironed out, the developer can employ a range of strategies to sell to a more engaged audience.

Working hand-in-hand with developers

While the developers we work with have been building new developments in the best places and to the highest standards, we’ve been developing an excellent network of investors at home and abroad who turn to us to benefit from off-market property investment opportunities.

We discuss marketing plans with the developers and then swing into action with some sales strategies that protect the integrity of the development while increasing off-plan property sales.

We discuss property fundamentals (shops, schools, transport links, major employers and major investment) with the investor, relating how the developer’s property offered fits into the growth and income producing bracket that our investors are seeking.

Our investors rely on us to source incredible and exclusive deals – they take on a larger risk because we’re able to offer them ground floor opportunities that have real rental appeal in the long term. These investors aren’t for flipping; when it comes to selling your next tranche of off-plan properties, you won’t find you’ve got unexpected competition for buyers’ signatures.

Foreign investors are the lifeblood of off-plan property sales

We’ve seen a sizeable increase in enquiries from foreign property investors. They’ve been buoyed by the fall in the value of sterling. Despite the Brexit negativity in some quarters, the UK is still a great place to invest. Housing demand outstrips supply, we benefit from a stable government, and there’s an entrepreneurial spirit that is the envy of the world. The UK is the fifth largest economy in the world, and Brexit is unlikely to change that.

Meeting the challenges of off-plan sales together

Developers face some challenges. Working with local councils to source the best locations for development is among them. But the UK needs more than 1 million new homes, so the opportunity for developers is very much alive.

Property investors are interested in off-plan property in the best locations. That means buying property that benefits from nearby shops, schools, and transport options. Our investors expect these fundamentals to be present; repositioning difficult-to-sell super prime properties is a strategy that is likely to create units that investors want. We can then work together to create a sales strategy that compels investors to invest in your newly planned off-plan properties.

Contact us today on + 44 207 923 5680, and we’ll be happy to discuss the help and expertise we can offer you as we link the best developers with the best investors.

Live with passion and fun,

Brett

londons city hall is on the side of foreign investment in off-plan property

London – City Hall on side for off-plan property foreign investment

Report could ease pressure on Mayor Kahn when targeting foreign property investors

It’s official – London’s new build developers need to sell to foreign investors. And that’s not Castlereach extolling the virtue of our valuable bank of high net worth foreign property investors. It’s what City Hall says, in a report briefing which has spun Sadiq Khan’s anti-foreign property investment rhetoric a full 180 degrees.

Here I look at the quiet about-turn made by Sadiq Khan’s administration, the research report for which it is calling for researchers, and what it means to developers of new build property and for sales of off-plan property in London.

Why is London property so expensive? … Blame the foreigners!

Londoners may have voted to remain in the European Union and be less visible UKIP than pretty much anywhere else in the United Kingdom, but they are most definitely anti-immigration when it comes to property investment. In a city that is culturally diverse (perhaps the most in the world?), Sadiq Khan found it extraordinarily easy to pander to the widely-held belief that London’s high house prices have foreign investment to blame.

Blaming foreign investors for high property prices is a capital city pastime, the topic of dinner parties and catch ups with friends. Embedded in the mindset of most Londoners. A 2014 YouGov survey found that almost half of Londoners felt the cause of house price inflation was the fault of foreign property investors and speculators. It probably runs counter to what you’d expect from a city where more than a third of its citizens were born overseas.

Mayor Sadiq Khan promised a review of the effect of foreign property investors on the London property market, and the hunt to source research is firmly underway. But the wording of City Hall’s research briefing indicates a softer and more welcoming approach to property investors from abroad. It also confirms the possibility that foreign investors might be good news for the London property market! Who’d have thought?

City Hall welcomes foreign investment into London off-plan property

The City Hall’s Housing and Land Directorate’s briefing says “We welcome investment from around the world in building new homes,” and while it acknowledges people’s concerns about foreign property investment in London, it also says that “The GLA wants to ensure any discussion of policy responses is underpinned by clear evidence and understanding.”

There are four areas the report examines and attempts to clarify with clear evidence to produce that understanding:

  • How many new homes are sold to property investors from overseas?
  • How many new homes owned by these investors remain empty?
  • How reliant is new build development of foreign property investors?
  • How does overseas financing contribute to the supply of homes?

The briefing accepts that “Off-plan sales are an important part of development viability. Industry bodies report that development finance can be difficult to obtain until 40% of units have been reserved and that most developers will not start construction on a development until a third of its units have been pre-sold.”

It admits that there are reports of the active role that foreign investors play in the new build property market, and wants to quantify their role.

Will the report be important for developers?

Sadiq Khan has made a big play of his desire to clamp down on foreign property investment into London. However, the briefing for the research role could give Mr Khan a heap of news and statistics that he wasn’t expecting to hear, but that he might want, now he’s had time to meet with industry insiders, property developers, estate agents, and others.

The reality is that the ability of new build developers to build the supply of homes that London needs relies on foreign investors. For Sadiq Khan and City Hall, this is an important concept that they are starting to understand. It’s real important for Mayor Khan because what he wants to do is build more affordable homes for Londoners – and that needs the developers on board. Right now, a big number of those affordable homes are built only as a condition of the permission for other new build properties given to developers.

An example of an affordable housing initiative in action is the development of the Aykon London One Tower, south of the Thames. It’s 50 floors of apartments are priced at up to £4 million. However, as part of the deal, Lambeth council gets 90 affordable homes. Without the luxury flats, those homes would not have materialised.

So, for sure the report will be relevant to developers – but it will also be important to Londoners. Perhaps it will be most important to Mayor Sadiq Khan: he’s promised a review, and he’s promised more affordable housing. Somehow he may need to extricate himself from blaming foreigners for London’s high house prices – what better way to do that than by an independent report that shows foreign investment is an integral piece of London’s property landscape?

A favourable report will likely kick into touch all the talk of penalising foreign property investors, and that will allow developers to continue to develop new build sites backed by foreign investment into off-plan property.

Foreign investors support new homes for Londoners

Off-plan property sales to investors – both domestic and foreign – help to fund development projects. These projects have created around a third of all affordable homes built in recent years – and that’s according to the GLA!

However, the GLA and Mayor may well have a point when they express their concern about investors buying property to leave empty. We’re not sure why investors would want to do that – our foreign investors are serious about making money from their London off-plan property purchases and want to tenant them after completion.

London’s property market has long since relied on foreign property investment money. Without investment from the Far East, Europe, and the United States, residential developments such as those in the shadow of Canary Wharf’s towers would never have got off the ground.

Will Mayor Sadiq Khan’s review harm foreign property investment?

It’s probable that the review ordered will be mostly accommodative to foreign property investors in London. The industry has already told the Mayor that it’s needed. He may have started to realise just how much his plans for more affordable housing rely on the ability of developers to continue building new build at a range of price levels. And that development relies pretty heavily on foreign investment, especially into off-plan property opportunities that support funding for entire projects.

The mayor may try to provide some solace to Londoners by instigating penalties or restrictions of some kind on investors (foreign or otherwise). In reality, there is probably little he can do. Calls for rent regulation, higher taxes on land, greater borrowing powers for local authorities to build, and harsh council tax penalties would all need central government legislation. That’s highly unlikely to be forthcoming.

Londoners want what Mayor Sadiq Khan wants: greater numbers of better homes, and more affordable housing.

Instead of butting heads with developers and being forced to fight foreign property investors, the report that City Hall has ordered may give the Mayor reasons to be more accommodative to developers and the investors in their off-plan property. Finally, investment by foreigners may well be seen to be positive for London’s property market at all price points, and not the sole reason for property price inflation.

To connect with us and our access to an active foreign investor base, call my team direct on +44 207 923 5680.

Keep in touch and connect with us on LinkedIn.

Live with Passion,

Brett Alegre-Wood